How in buggery has anyone worked this out?

How ironic to learn this week that the British government is resisting pressure to tax sugary foods just as Oprah Winfrey has announced she has purchased a 10% share in Weight Watchers. Oprah’s decision had immediate consequences: $700m in revenue for the weight-loss company over the course of the two days following the announcement;

Are they reporting sales in real time or something?

Oh.

Winfrey announced on Monday morning that she had agreed to purchase a 10% stake in Weight Watchers International and had signed a collaboration deal to promote the diet company and its services. The announcement has caused shares of Weight Watchers to soar. With the stock changing hands for around $18, Winfrey has single-handedly generated $700 million in stock market value in two days, given that the company has 63.6 million shares outstanding following the Winfrey deal.

We have absolutely no idea what the revenue rise was. The value of the equity rose $700 million though.

And equity valuations and revenues are not actually the same thing. However, Liz Moore is ignorant of this fact, the Guardian’s editorial team, all of them, is ignorant of this fact, their subeditors are ignorant of this important distinction. And, presumably, most of their readership are.

Difficult to have reasonable discussions and conversations about the modern economy when half the people are just plain damn dumb on the subject, isn’t it?

15 thoughts on “What?”

  1. Just another example, like in your post below, how these utter cunts who presume to pontificate at us on a daily basis know fuck all about even the very basics of which they spout their shite. They wouldn’t last a day in a real profession.

  2. It’s only a short step to demanding why Weight Watchers aren’t paying Corporation Tax on that $700m.

    And, by the way, it wasn’t in any way ironic.

  3. It’s only a short step to demanding why Weight Watchers aren’t paying Corporation Tax on that $700m.

    If anyone has access to the correct ear to start whispering these sorts of suggestions (eg, the occupy crowd?), that could be an equally useful a public service as the “Ragging on Ritchie” series.

  4. Was about to say what Squander was, just less swearily, which renders my comment doubly pointless.

    I wonder whether GCSE Business Studies would prove too hard a hurdle. Might be one way of weeding out.

  5. The rise in the market capitalisation should equal the future value of net free cash (profits if you will) of having Oprah on board* + value of the reduction in probability of financial distress + a temporary rise associated with market impact of Oprah’s purchase (assuming it was in the open market). The third part should disappear.

    *Endorsements + support

    In the fullness of time, one assumes that this will be more than 700 million in revenues.

  6. Is it a kind of insider trading, when someone like Oprah (or Warren) announces they’ve bought a bunch of stock? Does it become insider trading if, following the move in stock price, they have a sudden change of heart and cash in?

  7. ‘She can’t sell any of her Weight Watchers stock for two years and can’t unload the entire position for five years.’

    It appears her purchase was from treasury stock, and not on the open market. Hence it appears that this has more to do with her new agreement to be a spokesmodel for Weight Watchers.

    It is likely a good deal for both parties.

  8. As if sugary foods were not taxed – most sugary foods are (not all – I occasionally bake a cake for my Bible Study group and the agnostic/apathetics in my wife’s office happily polish off the left-overs).
    Fresh fruit, vegetables, fish, meat, bread are not taxed

  9. @ BiG
    You are, by definition in the UK, not an insider to your own information. Otherwise you could never make a bid for another company or make a significant purchase of their shares. If the next Brian Clough buys 1% of the shares in Middlesbrough from the majority shareholder at the same time as signing for them as part of a package deal, is that a crime?
    I decline to take an interest in Ms Winfrey – she is not my problem.

  10. “She can’t sell any of her Weight Watchers stock for two years and can’t unload the entire position for five years.”

    With a fatter and more prosperous citizenry almost guaranteed to be present in five years time I think her money is safe.

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